I like options when dealing with investments. Apparently Timothy Geithner and Washington do too.
A difference in terminology regarding options exists, such as options and warrants. In layman’s terms; however, both give a party the right to purchase shares of a company.
As part of the bailout money, banks sold warrants, i.e. collected the cash, to the government. The government then in turn received the right to exercise the warrants (up to 10 years) and take ownership in companies such as JP Morgan and Bank of America if they want too.
However, banks started getting the government out of their affairs as I mentioned in “Do They Get It?”
Today, the Treasury sold its warrants from Bank of America and made a ton of money, to the tune of 1.5 billion dollars!
The Treasury didn’t sell these warrants for that amount, the amount is the profit from the sale.
As a Treasury statement mentioned, the money made is an additional return to the taxpayers.
OK, give me a check for my percentage of the profits.
Let’ do some math for the profits.
Let’s assume there is still around 156 million taxpayers (from 2008 filers). For even quicker math, let’s use 150 million which makes dividing in my head easier. $1.5 billion divided by 150 million is $10.
$10 is not a big amount per person, but the idea is big to me and the small amount is supposed to be an “additional” return as well. I’ll take the rest too, how about you?
Aside from me not getting a check, let’s look at the investment or options side.
Options are basically a derivative investment.
Didn’t Obama and others blast banks and CEO’s for taking on risky financial activities?
Options are risky right? Wrong. Lack of knowledge is risky.
The government made billions in options (warrants technically), but this is considered a good strategy.
The difference in who decides what is good or bad depends on who is controlling the money – the private sector or the government.
When the private sector makes money, in my opinion, the people in government and other socialist demonize profit taking on the citizens. When the government makes the money, the actions are in the interest of the citizens.
Regardless whether the Big Boys (or Fat Cats) or Big Brother makes the money, if they are doing, I’m following the money. If the strategies are good enough for them, they are good enough for me.
I’ll continue buying and selling options in order to reduce my risk and make money.
